Where are all the houses?

Inventory in the Berkeley area, CA is so low!! Clients are waiting for a decent house to come up.  I checked yesterday and in one week only 18 new homes in the East Bay!!!  Some of them are overpriced and others are your typical REO or short sale listings...  How can you sell those??  We need more homes to sell.  Market is holding steady in the East Bay.  I have seen a slight increase in sales prices in the last month as well.